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Diversity Management

Pirelli is characterised by a multinational context where individuals manifest a great diversity, whose conscious management simultaneously creates a competitive advantage for the Company and a shared social value.

The commitment made by Pirelli to equal opportunity and development of diversity at the workplace is stated in the Group’s principal sustainability documents: the Ethical Code approved by the Board of Directors, in the Group Social Responsibility Policy for Occupational Health, Safety, Rights and Environment and in the Equal Opportunities Statement, both signed by the Chairman. These documents have been distributed to all employees in their local language and published on the institutional website www.pirelli.com/Sustainability.

While respecting the cultural differences of the individual countries, what necessarily unites all Pirelli affiliates in the same culture are its shared corporate values, policies and rules, which are applied everywhere with the sole difference of the language into which they are translated.

Internationality and multiculturalism are the characteristic elements of the Group: Pirelli operates in over 160 countries on five continents, and 90.5% of employees on the payroll at December 31, 2013 worked outside of Italy. Awareness of the cultural differences that create the identity of the company entails maximum confidence in management having local origins: 75% of the senior managers work in their country of origin, with “senior managers” meaning those who reported directly to the Chairman & C.E.O. at December 31, 2013. To develop the innovative and managerial potential latent in a multicultural environment and in the encounter with diverse professional environments, the Company promotes the growth of its own managers through international mobility between different Group companies (see the following sections on “Compensation and International Mobility”). It is no accident that 50% of the senior managers active in 2013 had had at least one foreign intercompany work experience during their professional career at the Pirelli Group. Moreover, at December 31, 2013, 15% of all managers on foreign assignment were women. Pirelli is also committed to promoting maximum awareness of the positive differences that exist between the two sexes in a complex organisation like Pirelli, while giving due consideration to the fact that it is necessarily impacted by the different cultures existing in the different countries.

Following below is a breakdown of employees by gender in the three-year period 2011-2011-2013, expressed as the percentage weight of women against the total number of employees in each job category, the data shown in the following table demonstrate the positive evolution underway: in 2013 the number of women in the executive category reached 9%, up from the previous two years, while the percentage of women in the managerial category was 18%, and thus stable in comparison with the figures for the previous two years. The female presence in the blue collar category in 2013 reflected continuation of the growth recorded in 2012, amounting to 8% of workers in that category and up substantially from 2011. In 2013 female employees accounted for 12% of the total Group workforce, 3 percentage points above 2011.

percentage of women by professional category

Exec

Cadres

Exec + Cadres (= Tot. Manager)

White collars

Blue collars

Total

2011

8%

20%

18%

31%

5%

9%

2012

8%

20%

18%

35%

8%

13%

2013

9%

19%

18%

33%

8%

12%

Analysing the following table, the breakdown by gender in terms of employment contract shows a substantial balance between men and women. However, there is a small difference: the percentage of women with an indefinite term employment contract is slightly higher, while there is a greater percentage of men having a temporary employment position. Moreover, the number of women with an indefinite term employment contract climbed from 93% in 2011 to 97% in 2013, while men rose from 92% to 93%. This is an extremely positive phenomenon in view of non-discrimination, since it is a commonly held opinion in society that indefinite term jobs are held more by men, whereas definite term jobs are held more by women. Well, the Pirelli data show a positively inverted reality.

TYPE OF EMPLOYMENT CONTRACT BY GENDER

2011

2012

2013

Men

Women

Total

Men

Women

Total

Men

Women

Totale

Permanenti

92%

93%

92%

92%

96%

93%

93%

97%

93%

Temporanei

8%

6%

8%

7%

3%

6%

7%

3%

7%

Agency

0%

1%

0%

1%

1%

1%

0%

0%

0%

The rate of employee return to work after maternity/paternity leave at Pirelli in relation to its total workforce in all industrial countries where the Company operates was positive. In particular, one year after the date when the maternity or paternity event occurred in 2012, 90% of the women and 96% of the men were still employed at the Company in 2013. The difference, in the face of what must be considered a positive figure for women in any event, must be considered physiological in light of the different socio-cultural contexts in which Pirelli women work.

In the context of gender diversity, Pirelli dedicates special attention to equal remuneration, constantly monitoring it and seeking out the causes tied to the differences found in pay.

The countries considered in the analysis at December 31, 2013 are Brazil, China, Germany, Great Britain, Italy, Romania and Turkey, representing about two thirds of the total workforce covered by the remuneration policy (executives, cadres and white collar employees). At the methodological level, the remuneration ratios between men and women have been calculated, just like last year, for each individual country and by equal weight for the positions held, since a figure calculated at the Group level would not be representative insofar as it cannot give due consideration to the structural differences on different local markets, differences in professional seniority, and market remuneration logics whose peculiar characteristics are not comparable with each other.

The average differences in remuneration between men and men measured in the aforementioned countries is 6% (as opposed to 7% in 2012) in favour of men in the white collar job category, while it is 4% (compared with 5% in 2012), again in favour of men in the cadre category. Some examples:

Italy, which features a difference of about 2% between the average remuneration for men and average remuneration for women (as opposed to 5% in 2012) in favour of men in the white collar job category, while it is 3% (compared with 7% in 2012), again in favour of men in the cadre category;

Turkey, where the ratios favour men for both categories, with discrepancies of 1% (compared with 4% in 2012) if we refer to cadre and 6% (unchanged from 2012) for white collar workers;

Romania, where the white collar category has a ratio of 3% (compared with 4% in 2012) in favour of women, while women are again favoured by 4% in the cadre category (in 2012 the ratio was 4% in favour of men);

Brazil, where the ratio in the white collar category was 8% (compared with 6% in 2012) in favour of men, and 4% in favour of men in the cadre category (in 2012, there was substantial pay equality instead).

Finally, in regard to the executive category, where women account for 9% of the total (up from the 8% value in 2012), there was an average difference of about 1% in pay (compared with 3% in 2012), for the first time in favour of women. So, we have a situation of substantial pay equality that counterbalances the factors that are traditionally at the basis of differences in remuneration, such as professional seniority and age of the employees in the different cultures of the local markets.

In general, it must be considered that on the various markets, the “professional seniority” factor, which has had a powerful impact on pay trends, still favours men on average. On the other hand, the positive change in the international context in terms of attention to gender diversity and, especially, the numbers of women who are increasingly entering the labour market, will plausibly lead to greater gender balance over the medium term, including in terms of professional seniority, when the average seniority of women will have grown sufficiently to be comparable to that of men in most markets. The inclusive culture adopted by Pirelli as the basis for doing business permeates corporate life also in regard to individuals with handicaps.

As stated in the Group Sustainability Plan 2013-2017 with Targets to 2020, Pirelli is committed to increasing refinement of its proxy to identify any pay gaps, by expanding the formula to include elements of performance, rank, and seniority that heavily impact remuneration, that might plausibly cause an objective reduction in the gap, where it exists.

In regard to the standard salary of new hires during their first year of work at Pirelli, this is greater than the minimums prescribed by local legislation And there are no differences between men, women, or any other sort of diversity.

The inclusive corporate culture cultivated by Pirelli in its way of doing business permeates corporate life even in the case of persons with different abilities. In order to standardise the corporate culture of subsidiaries and associated companies towards disabled persons, the Pirelli Equal Opportunities Policy lists disability among protected differences, as a value and operating model applicable to all affiliates.

In Italy, the Group has made and signed specific agreements with the relevant authorities to promote hiring of disabled workers by the Group. It participates in social programmes that facilitate matching the demand and supply of work between the Company and disabled candidates, but not only in relation to them (also between Company and foreign candidates).

The percentage measurement of disabled employees in the multinational context of the company clashes with the objective difficulty of measuring their number, both because in many countries where the Group is present, there are no specific laws or regulations promoting their employment and therefore disabilities are not automatically detected, and because in many countries this information is deemed confidential and protected by privacy laws. All this considered, about 1.5% of the total work force is comprised of disabled emplyees as defined by local legislation.

It is likely that the actual percentage of disabled persons working at Pirelli might be higher, although any estimates would be discriminatory per se.

In regard to the “age” factor, the following table illustrates how the population (including the managerial population) is evenly young between the two genders, so that the average age of men and women was substantially the same over the entire three-year period.

The following table instead shows the average seniority in service as highlighted by job category and gender.

No significant differences are noted between men and women, since those measured over the last two years are substantially attributable to the entry into the scope of reporting of a large number of women who naturally began accumulating seniority at Pirelli only in 2012 and 2013.

In spite of the low average age of employees, their length of service at Pirelli is proportionately high, confirming a high sense of loyalty.

The following activities have been well-established for years to promote equal opportunities:

as far as possible in the recruitment process, seek to provide a high proportion of women in the range of candidates;

use of training to impact the cultural change connected with the promotion of diversity, using specific modules dedicated to “Diversity Management,” beginning with the courses dedicated to new hires (e.g. Pirelli’s way Joining the Group);

take positive measures for respect of cultural and religious diversity, such as different foods that are clearly marked in company canteens so that everyone may freely comply with their own religious dietary restrictions;

multilingual book stores in the factory, and multilingual welcome kits for those joining Pirelli at a facility in a country other than their home country.

Monitoring by the company of the level of acceptance and promotion of diversity as perceived by employees at its facilities plays a key role in terms of management opportunities. The Your Opinion survey is conducted in local languages at the Group level every two years. The results of the survey conducted at the end of 2013 are being consolidated and will be presented to employees during the first quarter of 2014, and thus reported in the next Sustainability Report. The results of the previous survey were highly appreciated in regard to employees’ perception of high level of acceptance of gender, cultural and age differences within the Group.

The Group Whistleblowing Procedure is a tool that supports compliance and internal control activities, as well as risk prevention. It is used specifically for reports of possible cases of corruption, violation of the principles or precepts set out in the Ethical Code laws and regulations, obviously including equal opportunities. There were no Whistleblowing reports in 2013 concerning acts of discrimination. Reference is made to the section “Group Whistleblowing Procedure” in Chapter 1 of this report for more details on the Whistleblowing reports received in 2012 and 2013.

Pirelli has been active for years in promoting external diversity, both nationally and internationally. Its membership in the European Alliance for CSR, CSR Europe, (of which Pirelli was a member of the Board as well), preparation of toolkits for management of multiculturalism and gender differences with the Sodalitas Foundation (the Group has a seat on its Management Committee), active participation in drafting the Italian Charter for Equal Opportunities and Job Equality are some of the most representative activities that have engaged the Group in sharing its good practices with other responsible companies.

Pirelli is also committed to promoting welfare programmes for its own employees. For this purpose, it has created an ad hoc organisational function, the Welfare Group Manager with group level responsibility, confirming its growing attention to this issue. The Group has been historically supporting its own employees, with numerous measures calibrated to the different socio-cultural contexts in which the affiliates operate. Widespread measures include: day care centres offering special discounts to Group employees, subsidised holidays for employee children, scholarships, healthcare benefits, prevention campaigns, company discount arrangements with various service providers (from medical exams to car rental).

More details are found in the section “Welfare and initiatives for the internal community” in this report.